3 important insights for circular economy action plans

To make circular economy a reality, the EU made a circular economy action plan in 2020. The plan contains strategies relevant throughout the whole value chain. Due to the young age of the circular economy as a concept, there is however a lack of consensus of how it should be implemented and how progress should be evaluated. To ensure that circular economy successfully can improve environmental performance, underlying theories must be based on the right premises. This gives a foundation for businesses, politicians and other actors to make future action plans and business models even more capable of improving environmental performance. Therefore, three fundamental insights about circular economy are presented from a researcher’s perspective in this post.

1. Progress evaluation strategies for circular economy

The first thing we need is a consensus on how to evaluate progress in circular economy. This is best done by using measurable indicators, metrics or methods that assess environmental performance of measures.

Today, Life Cycle Assessment (LCA) is probably the most scientifically evaluated environmental assessment method. It is used to compare different solutions, both potential and actual, and draw conclusions about environmental performance of products and services.

One advantage with LCA is that it is standardized, meaning that all actors using it follow the same process when using it. However, LCA is often complicated to an extent that specific knowledge of the method is required. This means that only experts with experience in the subject can use it. 

New and specified metrics intended to measure progress in the circular economy must be simple to use for multiple reasons. Firstly, if they are too complicated,  LCA might as well be used, since it is already standardized. Secondly, it serves a pedagogical purpose. If an indicator is easy to understand and can be coupled with a theoretical model, it is likely that it will be used more.

It is, nevertheless, of great importance that the concept of circularity is defined in a way that makes sure increased environmental performance is achieved when applying it. When developing circularity indicators, the calculations must consider the effect on a number of impact categories (global warming, eutrophication, resource depletion, toxicity etc.).

Indicators must be adaptable and standardized

Indicators need to be adapted to the actors for which they are intended. For instance, a designer in the garment industry probably does not have the same interests as a public procurer working with education.

Indicators should also measure circularity on the same principles regardless of sector or actor. If a quantitative indicator is used, meaning that data from measurements are used, it should preferably use the same unit regardless of how it is applied. 

Without a standardized way to measure circularity, there is a risk that different actors interpret the concept differently. Moreover, the concept of circularity might drive solutions that do not lead to reduced environmental impact.

Today, hundreds of indicators for circular economy exist, with varying flaws and advantages. When creating a circular economy action plan, there must be consensus on how they should be used. Additionally, they must lead actors in a direction where overall environmental impact decreases.

2. A framework that enables quantification of circular economy

The second thing we need is a theoretical framework that couples ideas of circular economy to a quantifiable measure. Today, there are at least 114 definitions of circular economy according to an article written by Julian Kirchherr. This suggests that there are many interpretations of the concept. How we choose to interpret the concept of circularity will determine the chances to achieve environmental and social sustainability.

The Ellen McArthur framework

Let’s have a look at the perhaps most common perception of circular economy. One actor that has been important in shaping the concept is the Ellen McArthur foundation. When they describe circular economy they use three design principles: 

  • Designing out waste and pollution
  • Keep products and materials in use
  • Regenerate natural systems

The organization describes how different concepts of looping can reduce the demand of resources as well as waste creation. 

Another example is Cradle2Cradle that differentiate materials in technical and biological. The two types of materials should theoretically flow in two different cycles: the technical and biological. Figure 1 shows a framework made by Ellen McArthur foundation, where the theories from Cradle2Cradle also are included.

Figure 1: Circular economy as described by Ellen McArthur foundation.

The framework is a mindset that can be applied by all actors and in all types of organizations. It is a comprehensive, yet not specific, conceptualization that can help improve most aspects of environmental sustainability if applied correctly.

The framework can stand on its own and give guidance for anyone learning about circular economy. However, it would be valuable to combine with other frameworks that provide a quantifiable goal for circularity. That way, the understanding for how circular economy leads to overall sustainability can be increased.

Merging of circular and doughnut economy frameworks

Let’s say that we want to investigate the connection between circular economy and sustainability when making a circular economy action plan. Then circular economy should be combined with a framework that includes both environmental and social sustainability. For this purpose, the doughnut economy is great.

As shown in Figure 2, doughnut economy is defined by a set of functions that humans need for social sustainability. This sets the bar for the minimum extraction of resources. The ceiling is set by the maximum impact humanity can have on the planet before planetary boundaries are crossed.

The living space between these barriers should preferably be achieved by dividing the resources as evenly as possible. More sophisticated ways to use materials is also important, which is where circular economy comes into the picture.

Figure 2: Dougnut Economy. Shows the ceiling and floor for resource use, defined by social and environmental sustainability.

It is not an easy task to quantify these barriers or define and decide what functions people should be entitled to. It is probably even harder to implement these ideas for a number of reasons.

Nevertheless, from a systemic perspective of environmental impact analysis, this model gives an understanding for the goal with circular economy. If assessed correctly, it could help in quantifying to what extent materials should circulate. Additionally, quality requirements and consumption rates could also be derived.

3. A strategy for both material and energy use

The third insight regards energy and material aspects of environmental impact. In political debates, at least in Sweden, the subject of environmental sustainability is almost always focused on energy production strategies. In fact, that is also very common in other contexts as well.

Energy tends to be the dominating aspect of environmental impact, and it is not completely wrong. Energy production and generation generates the majority of greenhouse gas emissions and many other pollution types. However, material use is a substantial contributor to greenhouse gas emissions and drives resource depletion. In fact, almost 50 % of the global carbon emissions can be traced to material production. 

Unlike in traditional debates, circular economy theories focuses almost completely on material savings. If you take another look at figure 1, you will realize that there are many strategies directed to the handling of materials.

As an example, product lifetime extension is achieved by promoting increased quality, reuse and repurposing of products. Material lifetime extension is achieved by increasing material recycling, -upcycling, -downcycling and cascading. 

Less attention is given to energy reduction strategies. In some cases, implementing these material reduction strategies could result in increased energy use through transportation or heating, for instance. This causes so-called problem shifting, meaning environmental impact is reduced in one impact category, while increased in another. On the other hand, material savings almost always lead to energy savings.

To avoid problem shifting, energy- and material saving strategies must be combined so that improvement in every possible environmental impact category is made. This is why more attention should be targeted to how material and energy use can be both minimized and optimized.


Circular economy is a concept/strategy with high potential to reduce environmental impact. To fully achieve its potential, many changes are required throughout the whole value chain. Many actors have to be involved with different knowledge of sustainability.

To prepare different actors for upcoming regulations changes, they need a clear idea of what it is and why we need it. For that purpose, simple yet scientifically and empirically evaluated indicators combined with intuitive frameworks are necessary.

Before making rash decisions based on the ideas of circular economy, attention must be directed to the long term and global effects on the environment. The presented topics are important to take circular economy in a direction that supports sustainable development.

As a researcher in circular economy, it is pleasant to see that the EU takes circular economy seriously. Future updates of the circular economy action plan must however be even more systemic, disruptive and coupled to frameworks such as the doughnut economy. That way, there is a chance that living within the planetary boundaries can become possible. Likewise, the worst consequences of climate catastrophes and other environmental disasters may be avoided.

Hopefully, this post has helped increase the understanding for how circular economy and sustainability can be combined. If you are interested in the progress in this area, I suggest that you subscribe to my newsletters and if you want to know more about the basics of circular economy, check out the ultimate guide to circular economy.

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